System and method for flexible payment terms

ABSTRACT

A method is disclosed for offering transaction account consumers with payment term options to pay a minimum amount due early, defer payment into the following payment cycle, and pay a standard amount when due. When generating a periodic billing statement, the invention determines a consumer&#39;s eligibility to elect early payment, deferred payment, and regular payment. When a consumer is eligible for early payment, a received payment is compared to a discount rate tier, then a discount amount is calculated and credited to the consumer&#39;s account. When the consumer is eligible for deferred payment, the system calculates a new current minimum payment due by multiplying the current non-deferred balance by a predetermined percentage amount and adding the result to the deferred balance. When the consumer is not eligible for deferred payment, the system calculates a new current minimum due by summing the current non-deferred balance with the deferred balance.

CROSS REFERENCE TO RELATED APPLICATIONS

This application claims priority to, and the benefit of, U.S.Provisional Application Ser. No. 60/912,314, filed Apr. 17, 2007 andentitled “System and Method for Flexible Payment Terms”, which is herebyincorporated by reference in its entirety.

FIELD OF INVENTION

The present invention generally relates to providing payment terms for atransaction account, and more particularly, to enabling consumers havinga line of credit to choose to pay early to receive a discount, deferpayment without interest, or submit a regularly scheduled paymentaccording to the original terms.

BACKGROUND OF THE INVENTION

Various programs have been established to enable consumers andbusinesses to conveniently and timely facilitate purchases based on aline of credit. Consumers may enjoy some tangible value from utilizing acash-back card, or a interest-free revolving credit card. However, suchcards often include only one feature and/or the interest-free benefit islimited to a short-term, namely only 12-15 months of no interest. Incontrast, recent research has demonstrated that choice and flexibilityprovide a much greater tangible value for a segment of small businessconsumers, and a value that is not being provided today by transactioncard companies.

Improved cash flow management is a core need of any consumer and smallbusiness. There are many financial tools that exist to help smallbusinesses and consumers with cash flow management (e.g. lines ofcredit, promotional periods on credit cards, loans etc.). However, noneof these products sufficiently combine these features on a transactioncard in a manner which provides easy accessibility and broad scalereach. As such, a need exists for a line of credit that combines thefeatures of existing financial tools to provide the level of paymentflexibility that is often desirable when considering the uncertaintiestypically associated with small business administration.

SUMMARY OF THE INVENTION

The invention provides consumers with payment term options for theirtransaction accounts. In general, a consumer may choose to pay aperiodic payment early to receive a payment discount, defer a paymentuntil the next payment cycle without incurring additional interest andfees, or submit a payment in accordance with the standard transactionaccount requirements.

When receiving a payment according to an early payment term, in oneembodiment, the method comprises: receiving a payment from the consumerin response to a billing statement; determining when the payment is anearly payment based on an early payment date; retrieving a discountrate, wherein the discount rate is determined by comparing an amount ofthe early pay eligible spend to an early payment tier; calculating anearly payment credit based on the early pay eligible spend and thediscount rate; and, posting the early payment credit to an account ofthe consumer.

When receiving a payment according to a deferred payment term, in oneembodiment, the method comprises receiving an election for the deferredpayment term from the consumer in response to a billing statement;determining when the election does not exceed a predetermined number ofavailable deferred payments to determine when the consumer is eligiblefor the deferred payment; moving a non-deferred balance to a deferredbalance when the non-deferred balance is greater than zero and anaccount of the consumer is current; calculating a new current defer payoption (i.e., an amount the consumer is able to defer on the nextbilling cycle) based on the deferred balance and a new non-deferredbalance; and, incrementing a deferred payment counter.

When posting a payment according to the deferred payment term, in oneembodiment, the method comprises receiving a transaction; determining atype of the transaction; adding an amount of the transaction to anoutstanding balance, when the type is a debit; offsetting an accountbalance starting with a delinquency with the amount of the transaction,when the type is a credit; and, offsetting an account balance startingwith a delinquency with the amount of the transaction, when the type isa payment.

BRIEF DESCRIPTION OF THE DRAWINGS

A more complete understanding of the present invention may be derived byreferring to the detailed description and claims when considered inconnection with the Figures, wherein like reference numbers refer tosimilar elements throughout the Figures, and:

FIG. 1 is a block diagram illustrating major system components foraccepting and processing payment term options, in accordance with anexemplary embodiment of the present invention;

FIGS. 2A-2B are flow charts illustrating an exemplary process for end ofcycle processing of early and deferred payments, in accordance with anexemplary embodiment of the present invention; and,

FIG. 3 is flow chart illustrating an exemplary posting process relatingto a deferred payment term option, in accordance with an exemplaryembodiment of the present invention.

DETAILED DESCRIPTION

The detailed description herein is presented for purposes ofillustration only and not of limitation. For example, the steps recitedin any of the method or process descriptions may be executed in anyorder and are not limited to the order presented. For the sake ofbrevity, conventional data networking, application development and otherfunctional aspects of the systems (and components of the individualoperating components of the systems) may not be described in detailherein.

The invention includes a unique combination of one or more featuresassociated with a transaction card. The invention allows the flexibilityto choose certain optional payment terms each month or during any otherpre-defined, random, periodic or other time period. The consumer, host,issuer, acquirer, merchant and/or any other entity may be able to chosethe payment term. In one embodiment, the payment terms include an earlypayment discount, a defer payment term with a deferral fee (but withoutan interest charge) and a standard payment term.

With reference to FIG. 1, system 100 facilitates interaction between aconsumer 105 and the Card Issuer Systems (CIS) 160 through, in oneembodiment, a web client 110 with a network connection to an Internetserver 120 by way of the Internet. In one embodiment, Internet server120 may employ an authentication server in order to validatecredentials, assign proper permissions, and retrieve preferencesinformation for authorized consumers of CIS 160. In another embodiment,Internet server 120 may employ an application server to manage variousapplications and utilities that are utilized by the system. In stillanother embodiment, Internet server 120 interacts directly with thevarious systems and components disclosed herein. System 100 may includeany number of computing platforms and databases that may be commonlyfound within a typical transaction account environment (e.g., AmericanExpress®). Such systems may include, for example, an accounts receivablesystem, accounts receivable database 140, a financial capture system145, a global relationship management system 150, and a statement andbilling database 155. Other systems may include, for example, newaccounts systems, management information systems, business informationsystems, and the like. Each of the systems may be interconnected withinby a network, as will be described herein. A middleware server and/orapplication 130 may serve as an intermediary between the various systemsto ensure appropriate communications between disparate platforms. Areport engine 125 retrieves and/or is provided with data from thevarious systems in order to generate billing statements, reports, andthe like.

In addition to the components described above, CIS 160 or any othercomponents discussed herein may further include one or more of thefollowing: a host server or other computing systems including aprocessor for processing digital data; a memory coupled to the processorfor storing digital data; an input digitizer coupled to the processorfor inputting digital data; an application program stored in the memoryand accessible by the processor for directing processing of digital databy the processor; a display device coupled to the processor and memoryfor displaying information derived from digital data processed by theprocessor; and a plurality of databases.

As will be appreciated by one of ordinary skill in the art, one or moreof the components of system 100 may be embodied as a customization of anexisting system, an add-on product, upgraded software, a stand alonesystem (e.g., kiosk), a distributed system, a method, a data processingsystem, a device for data processing, and/or a computer program product.Accordingly, individual system 100 components may take the form of anentirely software embodiment, an entirely hardware embodiment, or anembodiment combining aspects of both software and hardware. Furthermore,individual system 100 components may take the form of a computer programproduct on a computer-readable storage medium having computer-readableprogram code means embodied in the storage medium. Any suitablecomputer-readable storage medium may be utilized, including hard disks,CD-ROM, optical storage devices, magnetic storage devices, and/or thelike.

The invention contemplates uses in association with web services,utility computing, pervasive and individualized computing, security andidentity solutions, autonomic computing, commodity computing, mobilityand wireless solutions, open source, biometrics, grid computing and/ormesh computing.

Consumer 105 may include any individual, group of individuals, charity,cardholder, business, entity, government organization, software and/orhardware that utilizes system 100. Consumer may also include anyone whoapplied for the account, currently has the card in her possession, hasproxy or other rights to use or maintain the account, is partially orfully responsible to pay the charges on the account and/or the like.Consumer 105 may include a consumer who uses an account code without anyphysical card, uses a transponder, and/or uses a physical transactioncard, to purchase items which are billed on the billing statementdiscussed herein. Consumer may also select payment terms relating to arevolving line of credit account, submit payments, and/or view billingstatements. Consumer 105 may be, for example, an American Express® cardmember who elects a payment term in accordance with the presentinvention. In another embodiment, consumer 105 may be a consumer servicerepresentative or the like who interacts with system 100 to provideaccount information and configure payment terms or terms on behalf of atransaction account holder. In either embodiment, consumer 105 mayinterface with CIS 160 via any communication protocol, device or methoddiscussed herein or known in the art. In one embodiment, consumer 105may interact with CIS 160 by way of an Internet browser at a web client110.

Web client 110 comprises any hardware and/or software suitablyconfigured to facilitate input, receipt and/or review of informationrelating to merchants that are selected based on a search term enteredinto a search engine such as, for example, Google™, Yahoo™, MSN™, AOL™,and/or any other Internet-wide or web site centric search engines. Webclient 110 includes any device (e.g., personal computer) whichcommunicates (in any manner discussed herein) with CIS 160 via anynetwork discussed herein. Such browser applications comprise Internetbrowsing software installed within a computing unit or system to conductonline transactions and/or communications. These computing units orsystems may take the form of a computer or set of computers, althoughother types of computing units or systems may be used, includinglaptops, notebooks, hand held computers, set-top boxes, workstations,computer-servers, main frame computers, mini-computers, PC servers,pervasive computers, network sets of computers, and/or the like.Practitioners will appreciate that web client 110 may or may not be indirect contact with CIS 160. For example, web client 110 may access theservices of CIS 160 through another server, which may have a direct orindirect connection to Internet server 120.

As those skilled in the art will appreciate, web client 110 includes anoperating system (e.g., Windows NT, 95/98/2000, OS2, UNIX, Linux,Solaris, MacOS, etc.) as well as various conventional support softwareand drivers typically associated with computers. Web client 110 mayinclude any suitable personal computer, network computer, workstation,minicomputer, mainframe or the like. Web client 110 can be in a home orbusiness environment with access to a network. In an exemplaryembodiment, access is through a network or the Internet through acommercially available web-browser software package.

Web client 110 may be independently, separately or collectively suitablycoupled to the network via data links which includes, for example, aconnection to an Internet Service Provider (ISP) over the local loop asis typically used in connection with standard modem communication, cablemodem, Dish networks, ISDN, Digital Subscriber Line (DSL), or variouswireless communication methods, see, e.g., Gilbert Held, UnderstandingData Communications (1996), which is hereby incorporated by reference.It is noted that the network may be implemented as other types ofnetworks, such as an interactive television (ITV) network.

Web client 110 may include any number of applications, code modules,cookies, and the like to facilitate interaction with CIS 160 in orderto, for example, view statements, view payment terms, view spendinformation, elect a payment term, submit/authorize a payment, and thelike. In one embodiment, web client 110 may store consumer 105preferences and/or any other information disclosed herein on a harddrive or any other local memory device. Accordingly, web client 110 mayretrieve and store consumer information within a memory structure of webclient 110 in the form of a browser cookie, for example. In anotherembodiment, web client 110 retrieves information relating to consumer105 from CIS 160 on establishing a session with server 120.

Firewall 115, as used herein, may comprise any hardware and/or softwaresuitably configured to protect CIS 160 components from users of othernetworks. Firewall 115 may reside in varying configurations includingstateful inspection, proxy based and packet filtering among others.Firewall 115 may be integrated as software within Internet server 120,any other CIS 160 components or may reside within another computingdevice or may take the form of a standalone hardware component.

Server 120 may include any hardware and/or software suitably configuredto facilitate communications between web client 110 and one or more CIS160 components. Further, server 120 may be configured to transmit datato web client 110 within markup language documents. As used herein,“data” may include encompassing information such as commands, queries,files, data for storage, and/or the like in digital or any other form.Server 120 may operate as a single entity in a single geographiclocation or as separate computing components located together or inseparate geographic locations.

Server 120 may provide a suitable web site or other Internet-basedgraphical user interface which is accessible by consumers. In oneembodiment, the Microsoft Internet Information Server (IIS), MicrosoftTransaction Server (MTS), and Microsoft SQL Server, are used inconjunction with the Microsoft operating system, Microsoft NT web serversoftware, a Microsoft SQL Server database system, and a MicrosoftCommerce Server. Additionally, components such as Access or MicrosoftSQL Server, Oracle, Sybase, Informix MySQL, InterBase, etc., may be usedto provide an Active Data Object (ADO) compliant database managementsystem.

Any of the communications, inputs, storage, databases or displaysdiscussed herein may be facilitated through a web site having web pages.The term “web page” as it is used herein is not meant to limit the typeof documents and applications that might be used to interact with theuser. For example, a typical web site might include, in addition tostandard HTML documents, various forms, Java applets, JavaScript, activeserver pages (ASP), common gateway interface scripts (CGI), extensiblemarkup language (XML), dynamic HTML, cascading style sheets (CSS),helper applications, plug-ins, and/or the like. A server may include aweb service that receives a request from a web server, the requestincluding a URL (http://yahoo.com/stockquotes/ge) and an IP address(123.56.789). The web server retrieves the appropriate web pages andsends the data or applications for the web pages to the IP address. Webservices are applications that are capable of interacting with otherapplications over a communications means, such as the Internet. Webservices are typically based on standards or protocols such as XML,SOAP, WSDL and UDDI. Web services methods are well known in the art, andare covered in many standard texts. See, e.g., Alex Nghiem, IT WebServices: A Roadmap for the Enterprise (2003), hereby incorporated byreference.

Middleware 130 may include any hardware and/or software suitablyconfigured to facilitate communications and/or process transactionsbetween disparate computing systems. Middleware components arecommercially available and known in the art. Middleware 130 may beimplemented through commercially available hardware and/or software,through custom hardware and/or software components, or through acombination thereof. Middleware 130 may reside in a variety ofconfigurations and may exist as a standalone system or may be a softwarecomponent residing on the server 120. Middleware 130 may be configuredto process transactions between the various components of CIS 160 andany number of internal or external issuer systems 100 for the purposesdisclosed herein.

In order to control access to any component of CIS 160, server 120 mayinvoke an authentication server (not shown) in response to consumer 105submissions of authentication credentials received at server 120 fromweb client 110. The authentication server may include any hardwareand/or software suitably configured to receive authenticationcredentials, encrypt and decrypt credentials, authenticate credentials,and grant access rights according to pre-defined privileges attached tothe credentials. The authentication server may grant varying degrees ofapplication and data level access to users based on information storedwithin a database and/or any other known memory structure.

AR database 140 and statement and billing database 155 may include anyhardware and/or software suitably configured to facilitate storing datarelating to, for example, transactions, statements, amounts owed,payments, payment type election, identification, authenticationcredentials, consumer permissions, consumer preferences, and the like.One skilled in the art will appreciate that system 100 may employ anynumber of databases in any number of configurations. Further, anydatabases discussed herein may be any type of database, such asrelational, hierarchical, graphical, object-oriented, and/or otherdatabase configurations. Common database products that may be used toimplement the databases include DB2 by IBM (White Plains, N.Y.), variousdatabase products available from Oracle Corporation (Redwood Shores,Calif.), Microsoft Access or Microsoft SQL Server by MicrosoftCorporation (Redmond, Wash.), or any other suitable database product.Moreover, the databases may be organized in any suitable manner, forexample, as data tables or lookup tables. Each record may be a singlefile, a series of files, a linked series of data fields or any otherdata structure. Association of certain data may be accomplished throughany desired data association technique such as those known or practicedin the art. For example, the association may be accomplished eithermanually or automatically. Automatic association techniques may include,for example, a database search, a database merge, GREP, AGREP, SQL,using a key field in the tables to speed searches, sequential searchesthrough all the tables and files, sorting records in the file accordingto a known order to simplify lookup, and/or the like. The associationstep may be accomplished by a database merge function, for example,using a “key field” in pre-selected databases or data sectors.

More particularly, a “key field” partitions the database according tothe high-level class of objects defined by the key field. For example,certain types of data may be designated as a key field in a plurality ofrelated data tables and the data tables may then be linked on the basisof the type of data in the key field. The data corresponding to the keyfield in each of the linked data tables is preferably the same or of thesame type. However, data tables having similar, though not identical,data in the key fields may also be linked by using AGREP, for example.In accordance with one aspect of system 100, any suitable data storagetechnique may be utilized to store data without a standard format. Datasets may be stored using any suitable technique, including, for example,storing individual files using an ISO/IEC 7816-4 file structure;implementing a domain whereby a dedicated file is selected that exposesone or more elementary files containing one or more data sets; usingdata sets stored in individual files using a hierarchical filing system;data sets stored as records in a single file (including compression, SQLaccessible, hashed via one or more keys, numeric, alphabetical by firsttuple, etc.); Binary Large Object (BLOB); stored as ungrouped dataelements encoded using ISO/IEC 7816-6 data elements; stored as ungroupeddata elements encoded using ISO/IEC Abstract Syntax Notation (ASN.1) asin ISO/IEC 8824 and 8825; and/or other proprietary techniques that mayinclude fractal compression methods, image compression methods, etc.

In one exemplary embodiment, the ability to store a wide variety ofinformation in different formats is facilitated by storing theinformation as a BLOB. Thus, any binary information can be stored in astorage space associated with a data set. As discussed above, the binaryinformation may be stored on the financial transaction instrument orexternal to but affiliated with the financial transaction instrument.The BLOB method may store data sets as ungrouped data elements formattedas a block of binary via a fixed memory offset using either fixedstorage allocation, circular queue techniques, or best practices withrespect to memory management (e.g., paged memory, least recently used,etc.). By using BLOB methods, the ability to store various data setsthat have different formats facilitates the storage of data associatedwith system 90 by multiple and unrelated owners of the data sets. Forexample, a first data set which may be stored may be provided by a firstparty, a second data set which may be stored may be provided by anunrelated second party, and yet a third data set which may be stored,may be provided by an third party unrelated to the first and secondparty. Each of these three exemplary data sets may contain differentinformation that is stored using different data storage formats and/ortechniques. Further, each data set may contain subsets of data that alsomay be distinct from other subsets.

As stated above, in various embodiments of system 100, the data can bestored without regard to a common format. However, in one exemplaryembodiment of the invention, the data set (e.g., BLOB) may be annotatedin a standard manner when provided for manipulating the data onto thefinancial transaction instrument. The annotation may comprise a shortheader, trailer, or other appropriate indicator related to each data setthat is configured to convey information useful in managing the variousdata sets. For example, the annotation may be called a “conditionheader”, “header”, “trailer”, or “status”, herein, and may comprise anindication of the status of the data set or may include an identifiercorrelated to a specific issuer or owner of the data. In one example,the first three bytes of each data set BLOB may be configured orconfigurable to indicate the status of that particular data set; e.g.,LOADED, INITIALIZED, READY, BLOCKED, REMOVABLE, or DELETED. Subsequentbytes of data may be used to indicate for example, the identity of theissuer, user, transaction/membership account identifier or the like.Each of these condition annotations are further discussed herein.

The data set annotation may also be used for other types of statusinformation as well as various other purposes. For example, the data setannotation may include security information establishing access levels.The access levels may, for example, be configured to permit only certainindividuals, levels of employees, companies, or other entities to accessdata sets, or to permit access to specific data sets based on thetransaction, merchant, issuer, user or the like. Furthermore, thesecurity information may restrict/permit only certain actions such asaccessing, modifying, and/or deleting data sets. In one example, thedata set annotation indicates that only the data set owner or the userare permitted to delete a data set, various identified users may bepermitted to access the data set for reading, and others are altogetherexcluded from accessing the data set. However, other access restrictionparameters may also be used allowing various entities to access a dataset with various permission levels as appropriate.

The data, including the header or trailer may be received by astand-alone interaction device configured to add, delete, modify, oraugment the data in accordance with the header or trailer. As such, inone embodiment, the header or trailer is not stored on the transactiondevice along with the associated issuer-owned data but instead theappropriate action may be taken by providing to the transactioninstrument user at the stand-alone device, the appropriate option forthe action to be taken. System 100 contemplates a data storagearrangement wherein the header or trailer, or header or trailer history,of the data is stored on the transaction instrument in relation to theappropriate data.

One skilled in the art will also appreciate that, for security reasons,any databases, systems, devices, servers or other components of system100 may consist of any combination thereof at a single location or atmultiple locations, wherein each database or system includes any ofvarious suitable security features, such as firewalls, access codes,encryption, decryption, compression, decompression, and/or the like.

In addition to those described above, the various system componentsdiscussed herein may include one or more of the following: a host serveror other computing systems including a processor for processing digitaldata; a memory coupled to the processor for storing digital data; aninput digitizer coupled to the processor for inputting digital data; anapplication program stored in the memory and accessible by the processorfor directing processing of digital data by the processor; a displaydevice coupled to the processor and memory for displaying informationderived from digital data processed by the processor; and a plurality ofdatabases. Various databases used herein may include: client data;merchant data; financial institution data; and/or like data useful inthe operation of the present invention. As those skilled in the art willappreciate, user computer may include an operating system (e.g., WindowsNT, 95/98/2000, OS2, UNIX, Linux, Solaris, MacOS, etc.) as well asvarious conventional support software and drivers typically associatedwith computers. The computer may include any suitable personal computer,network computer, workstation, minicomputer, mainframe or the like. Usercomputer can be in a home or business environment with access to anetwork. In an exemplary embodiment, access is through a network or theInternet through a commercially-available web-browser software package.

As used herein, the term “network” shall include any electroniccommunications means which incorporates both hardware and softwarecomponents of such. Communication among the parties in accordance withthe present invention may be accomplished through any suitablecommunication channels, such as, for example, a telephone network, anextranet, an intranet, Internet, point of interaction device (point ofsale device, personal digital assistant, cellular phone, kiosk, etc.),online communications, satellite communications, off-linecommunications, wireless communications, transponder communications,local area network (LAN), wide area network (WAN), networked or linkeddevices, keyboard, mouse and/or any suitable communication or data inputmodality. Moreover, although the invention is frequently describedherein as being implemented with TCP/IP communications protocols, theinvention may also be implemented using IPX, Appletalk, IP-6, NetBIOS,OSI or any number of existing or future protocols. If the network is inthe nature of a public network, such as the Internet, it may beadvantageous to presume the network to be insecure and open toeavesdroppers. Specific information related to the protocols, standards,and application software utilized in connection with the Internet isgenerally known to those skilled in the art and, as such, need not bedetailed herein. See, for example, Dilip Naik, Internet Standards AndProtocols (1998); Java 2 Complete, various authors, (Sybex 1999);Deborah Ray And Eric Ray, Mastering Html 4.0 (1997); and Loshin, TCP/IPClearly Explained (1997) and David Gourley and Brian Totty, HTTP, TheDefinitive Guide (2002), the contents of which are hereby incorporatedby reference.

The invention may be described herein in terms of functional blockcomponents, screen shots, optional selections and various processingsteps. It should be appreciated that such functional blocks may berealized by any number of hardware and/or software components configuredto perform the specified functions. For example, system 100 may employvarious integrated circuit components, e.g., memory elements, processingelements, logic elements, look-up tables, and/or the like, which maycarry out a variety of functions under the control of one or moremicroprocessors or other control devices. Similarly, the softwareelements of system 90 may be implemented with any programming orscripting language such as C, C++, Java, COBOL, assembler, PERL, VisualBasic, SQL Stored Procedures, extensible markup language (XML), with thevarious algorithms being implemented with any combination of datastructures, objects, processes, routines or other programming elements.Further, it should be noted that system 90 may employ any number ofconventional techniques for data transmission, signaling, dataprocessing, network control, and/or the like. Still further, system 90could be used to detect or prevent security issues with a client-sidescripting language, such as JavaScript, VBScript or the like. For abasic introduction of cryptography and network security, see any of thefollowing references: (1) “Applied Cryptography: Protocols, Algorithms,And Source Code In C,” by Bruce Schneier, published by John Wiley & Sons(second edition, 1995); (2) “Java Cryptography” by Jonathan Knudson,published by O'Reilly & Associates (1998); (3) “Cryptography & NetworkSecurity: Principles & Practice” by William Stallings, published byPrentice Hall; all of which are hereby incorporated by reference.

These software elements may be loaded onto a general purpose computer,special purpose computer, or other programmable data processingapparatus to produce a machine, such that the instructions that executeon the computer or other programmable data processing apparatus createmeans for implementing the functions specified in the flowchart block orblocks. These computer program instructions may also be stored in acomputer-readable memory that can direct a computer or otherprogrammable data processing apparatus to function in a particularmanner, such that the instructions stored in the computer-readablememory produce an article of manufacture including instruction meanswhich implement the function specified in the flowchart block or blocks.The computer program instructions may also be loaded onto a computer orother programmable data processing apparatus to cause a series ofoperational steps to be performed on the computer or other programmableapparatus to produce a computer-implemented process such that theinstructions which execute on the computer or other programmableapparatus provide steps for implementing the functions specified in theflowchart block or blocks.

Accordingly, functional blocks of the block diagrams and flowchartillustrations support combinations of means for performing the specifiedfunctions, combinations of steps for performing the specified functions,and program instruction means for performing the specified functions. Itwill also be understood that each functional block of the block diagramsand flowchart illustrations, and combinations of functional blocks inthe block diagrams and flowchart illustrations, can be implemented byeither special purpose hardware-based computer systems which perform thespecified functions or steps, or suitable combinations of specialpurpose hardware and computer instructions. Further, illustrations ofthe process flows and the descriptions thereof may make reference touser windows, web pages, web sites, web forms, prompts, etc.Practitioners will appreciate that the illustrated steps describedherein may comprise in any number of configurations including the use ofwindows, web pages, web forms, popup windows, prompts and/or the like.It should be further appreciated that the multiple steps as illustratedand described may be combined into single web pages and/or windows buthave been expanded for the sake of simplicity. In other cases, stepsillustrated and described as single process steps may be separated intomultiple web pages and/or windows but have been combined for simplicity.

Practitioners will appreciate that there are a number of methods fordisplaying data within a browser-based document. Data may be representedas standard text or within a fixed list, scrollable list, drop-downlist, editable text field, fixed text field, pop-up window, and/or thelike. Likewise, there are a number of methods available for modifyingdata in a web page such as, for example, free text entry using akeyboard, selection of menu items, check boxes, option boxes, and/or thelike.

System 100 enables consumer 105 (e.g., small business consumer), toimprove cash-flow management by utilizing a single financial instrument,such as a charge card. System 100 combines unique payment featureswithin one, singular product. Consumer 105 can utilize these cash flowmanagement tools for all of their purchases at any merchant/vendor thataccepts a particular transaction account.

As will be disclosed in greater detail herein, system 100 enablesconsumers 105 to elect a charge card payment term according theneeds/preferences of the business and/or in response to specificincentives offered by the card issuer relating to payment terms. Whiledisclosed herein in terms of a business charge card, practitioners willappreciate that the present invention may be equally applicable to othertypes of transaction accounts and/or lines of credit with minimal or nomodification to the disclosed systems and processes.

With reference to FIG. 2, system 100 may use the disclosed routines toappropriately process early payments. Practitioners will appreciate thatsystem 100 may incorporate many commonly implemented accountingprocesses relating to, for example, maintaining accounts receivables andaccounts payables. Therefore, such processes will not be discussed indetail herein.

At the close of a predefined cycle for a transaction account, system 100generates a billing statement based on a number of factors associatedwith consumer transactional activities. The statement may include, forexample, cycle start date, cycle end date, transaction date, merchantidentifier, transaction amount, accrued interest, fees, account balance,available credit limit, total amount due, due date, and the like. Thestatement may be provided to the consumer online (e.g., email,accessible from a link, accessible at a website, sent to a PDA, etc) orin paper form, or via fax, mail or any other means known in the art. Theconsumer 105 may submit a payment to CIS 160 via a check, cash, transferof funds from another account, electronically by submitting a bankaccount number via an Automated Clearing House (ACH), or any other meansknown in the art.

The statement may further include instructions regarding payment termsalong with check boxes corresponding to each payment term. In anotherembodiment, consumer 105 may establish a connection with CIS 160 by wayof web client 110 to view a billing statement online. An interface isprovided as disclosed herein, whereby consumer 105 may select a paymentterm. Consumer may also provide a payment term to CIS 160 via billingstatement stub, internet website, interactive voice response system andconsumer service representative.

When selecting a payment term, consumer 105 may choose to pay an amountdue earlier than the standard payment timeframe, in order to receive anEarly Pay Discount. The Early Payment Discount allows consumer 105 topay a new balance in full by a pre-established early pay date to receivea discount off the current billed charges and may be awarded via astatement credit. Discounts may be supported from 0% through 100% andmay be tiered. Such tiers may be based on, for example, a paymentamount, a spend amount, a payment date, a merchant identifier, anindustry code, a location or region associated with a purchase, atransaction amount, a spend trend, a merchant relationship, the statusof the consumer, the status of an account, an affiliation with anorganization, a product held by the consumer, the timing of a payment,time period for a purchase, a payment method, participation in aprogram, the length of relationship between the consumer and an account,and a credit rating of the consumer. In another embodiment, a tier maybe determined according to a flat percent discount for any amount ofspend. In another embodiment, the Early Pay Discount may be awarded inthe form of loyalty points, prizes, rewards, gifts, packages,opportunities, adventure trips, entertainment, meetings with specialpeople, special access passes, sporting events, cultural events,discounts on classifications of items, discounts on specific items,discounts on specific vendors, discounts within a defined geographicalarea, discounts within a consortium of merchants, and/or the like.

In one embodiment, when CIS 160 receives an election for Early PaymentDiscount from consumer 106, CIS 160 determines if the expected credit isgreater than zero (204). If the expected credit is not greater thanzero, then CIS 160 calculates eligible spend (210) for the next cycleEarly Payment credit. Specifically, CIS 160 takes into considerationcurrent spend data in light of net suspense and Early Pay credits inorder to determine a consumer's available spend for the next cycle. Netsuspense is derived from subtracting a decrease of the consumer'ssuspended balance from an increase of the consumer's suspended balance.A suspended balance is any balance that is under dispute by a consumer105. A suspended balance is not eligible for finance charges and is notdue until the dispute is resolved. In one embodiment, the calculationmay appear as follows:

(net cycle-to-date purchase activity)−(net suspense)+(early paycredits−early pay debits)

Thus, the above calculation may be used by CIS 160 to determine theamount of spend in which consumer 105 is eligible during the next creditcycle, as to not exceed a predetermined amount. However, practitionerswill appreciate that the invention may use any number of variouscalculations and variables to determine an optimal spend availability inaccordance with the present invention.

If the expected credit is greater than zero (step 204), then the systemdetermines whether the selected payment term option is for Early Payment(206). If Early Payment is not selected by consumer 105, then CIS 160calculates eligible spend (210) for the next cycle Early Payment creditas described above. However, if consumer 105 selects the Early Paymentterm, then the expected credit amount is posted as Early Payment credit(step 208). In one embodiment CIS 160 adds the credit amount to acycle-to-date field within statement and billing database 155. Thecycle-to-date amount may include issued Early Payment credits,year-to-date credits, and credits earned over consumer's participationin the program. CIS 160 further calculates eligible spend (210) for thenext cycle Early Payment credit as described above.

Practitioners will appreciate that transaction account issuers use avariety of methods to determine spend limits for consumers. Some assignan overall spend limit associated with a particular charge card account.In other words, the consumer may spend any amount in a given month aslong as the spend amount falls within the overall credit limit. Othercard issuers assign a monthly spend limit that is based on a number offactors relating to the consumer such as, for example, credit rating,spending trends, payment history, length of time as a consumer, and thelike. In some instances, the spend limit, or cap, may fluctuate duringany time period based on these and other factors. Therefore, at the endof each cycle, the account issuer may use any number of calculations todetermine a spend cap to be placed on the next cycle. In otherinstances, a spend cap is more static in nature and may be subject toperiodic review and adjustment by the card issuer.

If, in step 210, CIS 160 calculates an eligible spend that exceeds aconsumer's monthly cap (step 212), then the eligible spend amount isreplaced by the monthly cap (step 214). In one embodiment, the CIS 160awards Early Pay credits based on tiers. Such tiers may have associatedtherewith, a discount rate that is based on any number of factors suchas, for example, an eligible spend amount. In one embodiment, CIS 160determines a tier breakpoint to which the consumer 105 spend amountcorresponds (step 216). An Early Pay credit may then be calculated bymultiplying the tier's discount rate by the eligible spend (step 216).In another embodiment, other factors may be considered for thecalculation of an Early Pay discount rate. For example, a card issuermay partner with an airline for promotions. As such, CIS 160 may factorin an amount of consumer spend with the partnered airline to issue aneven higher Early Pay discount. Other spend factors may include, forexample, classifications of items, specific items, specific vendors, adefined geographical area, a consortium of merchants, a payment amount,a spend amount, a payment date, a merchant identifier, an industry code,a location or region associated with a purchase, a transaction amount, aspend trend, a merchant relationship, the status of the consumer, thestatus of an account, an affiliation with an organization, a productheld by the consumer, a timing of a payment, time period for a purchase,a payment method, a participation in a program, the length of arelationship between the consumer and the account, and a credit ratingof the consumer.

CIS 160 also determines the dates that payments should be sent andreceived in order to qualify consumer 105 for Early Pay credits for thenext cycle (step 218). In one embodiment, an Early Pay eligibility datemay be static in that it does not fluctuate from month-to-month. Forexample, the card issuer may simply require that payment must bereceived on or before the fifth business day prior to the regularpayment due date. In another embodiment, the card issuer may base theEarly Pay eligibility date on factors that may change periodically. Forexample, the Early Pay eligibility date may be based on the amount ofspend during the previous cycle, the amount of Early Pay discountapplied to the account during the previous cycle, a previous paymentdate, a previous payment amount, an account balance, a payment history,a spend amount, a payment date, a merchant identifier, an industry code,a location or region associated with a purchase, a transaction amount, aspend trend, a merchant relationship, the status of the consumer, thestatus of an account, an affiliation with an organization, a productheld by the consumer, a timing of a payment, time period for a purchase,a payment method, a participation in a program, the length of arelationship between the consumer and the account, and a credit ratingof the consumer.

The amount that consumer 105 must spend may be based on any number offactors such as, for example, the consumers account balance, the totalspend from the previous cycle, overall transaction history, paymenthistory, credit rating, and the like. In one embodiment, CIS 160calculates the balance that consumer 105 must spend to receive an EarlyPay discount by subtracting suspense from the total outstanding balance(step 220). CIS 160 stores billed values (step 222) within a historicalEarly Pay database table of statement and billing database 155.Moreover, billed values may be stored within cycle-to-date fields in anunbilled early pay table.

The Defer Payment term enables consumer 105 to defer payment on newbilled charges interest and penalty-free (or reduced) until the nextbilling cycle due date. This option may support a partial payment of 0to 99%, or no partial payment. With reference to FIG. 2B, in oneembodiment, statement processing proceeds to step 224 when consumer 105elects to defer payment. CIS 160 determines whether the previous amountdue has been paid (step 224). If the minimum due has not been paid, thencurrent non-deferred and deferred balances are moved to a thirty-dayspast due table. If the account is current, then CIS 160 determineswhether the non-deferred current balance is not equal to zero. If thisis the case, then the non-deferred current balance is removed to adeferred balance and a deferment counter is incremented (step 226). Inone embodiment, consumer 105 may be allowed to defer a balance a limitednumber of times. For instance, the card issuer may determine that allconsumers are limited to three payment deferments in a calendar year. Inanother embodiment, the number of available deferments may be limited byfactors relating to the consumer such as, for example, account balance,payment history, credit rating, exceeding monthly spending limits, andthe like.

CIS 160 calculates a new non-deferred balance (step 230) by subtractinga deferred balance, a delinquent due, and suspense from the totalaccount outstanding balance. As explained above, deferment may belimited, thus the system determines whether a deferment is eligible(step 232). If no deferment is available, then CIS 160 calculates thecurrent minimum payment due (step 236) by adding the currentnon-deferred balance to the deferred balance and the account is flaggedas ineligible for deferment. However, if a deferment is available, thenCIS 160 calculates the current minimum payment due by multiplying thecurrent non-deferred balance by a predetermined percentage amount andadding the result to the deferred balance and multiplying the sum by afee amount.

The optional fee amount charged to the consumer may be any fixed amountor percentage that the card issuer determines to be appropriate. In onembodiment, the fee amount is fixed across consumers. In anotherembodiment, the fee may be determined on a case-by-case basis and mayconsider factors such as, for example, account balance, payment history,credit rating, exceeding monthly spending limits, a payment amount, aspend amount, a payment date, a merchant identifier, an industry code, alocation or region associated with a purchase, a transaction amount, aspend trend, a merchant relationship, the status of the consumer, thestatus of an account, an affiliation with an organization, a productheld by the consumer, a timing of a payment, time period for a purchase,a payment method, a participation in a program, the length of arelationship between the consumer and the account, and a credit ratingof the consumer. According to the fixed fee embodiment, the currentminimum due may be calculated by adding the current non-deferredbalance, the deferred balance, and fee amount. When the paymentprocessing depicted in FIGS. 2A and 2B is complete for a given consumer,then CIS 160 returns to process the next statement (step 202).

When payments are deferred as described above, posting activities shouldbe modified in light of the differences between delinquent accounts anddeferred payments. Referring to FIG. 3, the posting process (step 305)begins with a determination of a transaction type (step 310). If thetransaction is a debit transaction (i.e., a charge card purchase), thenthe transaction amount is added to an outstanding balance, acycle-to-date balance, and current balance within AR database 140.

When the transaction type is a credit transaction (e.g., a returneditem), then the full credit amount is used to offset a delinquencyamount if present (step 335). If there is no delinquent amount or if thecredit is more than the amount needed to settle a delinquency, theremaining credit amount is applied to a deferred balance, if one exists.CIS 160 then subtracts 100% of the amount applied to the deferredbalance from the current amount due (step 340). If any portion of thecredit remains, the credit portion is applied to a non-deferred balance(step 345). This credit portion may be multiplied by the account's deferpay option due rate that is used to calculate the current defer payoption amount due in the prior cycle (e.g. 10% or 100%) and issubtracted from the current minimum payment due.

When the transaction type is a payment, then the payment amount isapplied to offset any delinquency that may be present (step 320). Ifthere is presently no delinquency or if the payment amount exceeds thedelinquency amount, then the remaining payment amount is used to first,offset a billed deferred amount, and second, to a new deferred amount(step 325). CIS 160 combines the amount deferred to the billed deferredand new deferred and offsets the minimum due by the sum of the two.

Whether the transaction type (step 310) is a credit or a payment, CIS160 performs a consistency check to adjust the current minimum due. Ifthe current minimum due is greater than the sum of the new minimum dueand the deferred amount (step 350), then the current minimum due isadjusted to match the total amount billed (step 355). A check is thenperformed to determine if the current minimum due is less than thebilled deferred amount (step 360, then the current minimum due isadjusted to match the deferred amount (step 365).

A third payment term option is to submit a Standard Payment, whichallows a consumer to pay a new balance in full by a pre-defined numberof days after a statement cycle is cut. Practitioners will appreciatethat various card issuers process “standard” payments in a variety ofways. Such standard processing may include, for example, processingpayments that are required to pay the full account balance within 30days, payments made over time with a minimum amount due each month,assessing an interest charge on an unpaid balance, and the like.

The unique combinations of features of the present invention, asdescribed above, have been shown in research to attract net new smallbusiness consumers to a transaction card company. A transaction cardcompany can also expect incremental charge volume from additional usage.Merchants can better manage Days Sales Outstanding (DSO) as well ascollection risk by encouraging consumers to put more purchases on thetransaction account of the present invention. Additionally, for thosemerchants who were previously offering discount terms for payment oncheck or cash, they can forego the terms by accepting the account of thepresent invention instead.

Consumers are better able to manage variable cash flow conditions byutilizing the two features of the invention (i.e., early and deferredpayments). For example, the Early Payment Discount provides a discountoff of the current bill that can be invested back into the consumer'sbusiness. The Defer Payment feature allows the consumer to defer paymentof large purchases, during a slow month or as a financial managementstrategy, for an additional billing cycle (total grace is up to 90 dayson new purchases). This invention also permits a transaction accountcompany to offer a new product and service that will ultimately attractnew card accounts and drive increased charge volume.

Benefits, other advantages, and solutions to problems have beendescribed herein with regard to specific embodiments. However, thebenefits, advantages, solutions to problems, and any elements that maycause any benefit, advantage, or solution to occur or become morepronounced are not to be construed as critical, required, or essentialfeatures or elements of the invention. The scope of the invention isaccordingly to be limited by nothing other than the appended claims, inwhich reference to an element in the singular is not intended to mean“one and only one” unless explicitly so stated, but rather “one ormore.” Moreover, where a phrase similar to ‘at least one of A, B, and C’is used in the claims, it is intended that the phrase be interpreted tomean that A alone may be present in an embodiment, B alone may bepresent in an embodiment, C alone may be present in an embodiment, orthat any combination of the elements A, B and C may be present in asingle embodiment; for example, A and B, A and C, B and C, or A and Band C. All structural, chemical, and functional equivalents to theelements of the above-described exemplary embodiments that are known tothose of ordinary skill in the art are expressly incorporated herein byreference and are intended to be encompassed by the present claims.Further, a list of elements does not include only those elements but mayinclude other elements not expressly listed or inherent to such process,method, article, or apparatus.

1. A method for processing early payments, said method comprising:receiving a payment from a consumer in response to a billing statement;determining when said payment is an early payment based on an earlypayment date; retrieving a discount rate, wherein said discount rate isdetermined by comparing an amount of early pay eligible spend to anearly payment tier; calculating an early payment credit based on saidearly pay eligible spend and said discount rate; and, posting said earlypayment credit to an account of said consumer when said early payment isreceived.
 2. The method of claim 1, wherein said early payment tier isbased on at least one of: a payment amount, a spend amount, a paymentdate, a merchant identifier, an industry code, a location or regionassociated with a purchase, a transaction amount, a spend trend, amerchant relationship, a status of said consumer, a status of saidaccount, an affiliation with an organization, a product held by saidconsumer, a timing of said payment, time period for a purchase, apayment method, a participation in a program, a length of relationshipbetween said consumer and said account, and a credit rating of saidconsumer.
 3. The method of claim 1, further comprising deducting saidearly payment credit from a future billing statement.
 4. The method ofclaim 1, further comprising adjusting the discount rate based on atleast one of: spend within an item classification, spend for a specificitem, spend at specific vendors, spend within a defined geographicalarea, spend within a consortium of merchants, a payment amount, a spendamount, a payment date, a merchant identifier, an industry code, alocation or region associated with a purchase, a transaction amount, aspend trend, a merchant relationship, a status of said consumer, astatus of said account, an affiliation with an organization, a productheld by said consumer, a timing of said payment, time period for apurchase, a payment method, a participation in a program, a length ofrelationship between said consumer and said account, and a credit ratingof said consumer.
 5. The method of claim 1, further comprisingdetermining when spend by said consumer qualifies for said discountrate.
 6. The method of claim 5, wherein said determining step comprisessubtracting suspense from said discount rate.
 7. The method of claim 1,wherein said early payment date is static.
 8. The method of claim 1,wherein said early payment date is determined based on at least one of:an amount of spend during a previous cycle, said discount rate appliedto said account during a previous cycle, a previous payment date, aprevious payment amount, an account balance, a payment history, apayment amount, a spend amount, a payment date, a merchant identifier,an industry code, a location or region associated with a purchase, atransaction amount, a spend trend, a merchant relationship, a status ofsaid consumer, a status of said account, an affiliation with anorganization, a product held by said consumer, a timing of said payment,time period for a purchase, a payment method, a participation in aprogram, a length of relationship between said consumer and saidaccount, and a credit rating of said consumer.
 9. The method of claim 1,wherein said step of receiving said payment comprises receiving saidpayment which is less than a total amount due on said billing statement.10. A method for processing deferred payments, said method comprising:receiving an election for a deferred payment from a consumer in responseto a billing statement; determining when said election does not exceed apredetermined number of available deferred payments to determine whensaid consumer is eligible for said deferred payment; moving anon-deferred balance to a deferred balance when said non-deferredbalance is greater than zero and an account of said consumer is current;calculating a new current defer payment option based on said deferredbalance and a new non-deferred balance; and, incrementing a deferredpayment counter.
 11. The method of claim 10, wherein said step ofreceiving an election comprises receiving a partial payment.
 12. Themethod of claim 10, further comprising determining said predeterminednumber of available deferred payments based on at least one of: abalance of said account, a payment history, a spend history, a paymentamount, a spend amount, a payment date, a merchant identifier, anindustry code, a location or region associated with a purchase, atransaction amount, a spend trend, a merchant relationship, a status ofsaid consumer, a status of said account, an affiliation with anorganization, a product held by said consumer, a timing of said payment,time period for a purchase, a payment method, a participation in aprogram, a length of relationship between said consumer and saidaccount, and a credit rating of said consumer.
 13. The method of claim10, further comprising calculating a new non-deferred balance bysubtracting a deferred balance, a delinquent amount due, and suspensefrom a total outstanding balance of an account of said consumer.
 14. Themethod of claim 10, further comprising calculating a current minimumpayment due when said consumer is not eligible for said deferredpayment, wherein said current minimum payment due is based on adding acurrent non-deferred balance to a deferred balance.
 15. The method ofclaim 10, further comprising determining said new current minimumpayment due based on adding said deferred balance to the result ofmultiplying said new non-deferred balance by a predetermined percentageamount.
 16. The method of claim 10, further comprising determining saidfee amount based on at least one of: a balance of said account, a valueproposition, a payment history, a spend history, a payment amount, aspend amount, a payment date, a merchant identifier, an industry code, alocation or region associated with a purchase, a transaction amount, aspend trend, a merchant relationship, a status of said consumer, astatus of said account, an affiliation with an organization, a productheld by said consumer, a timing of said payment, time period for apurchase, a payment method, a participation in a program, a length ofrelationship between said consumer and said account, and a credit ratingof said consumer
 17. A method for posting transactions based on adeferred payment, said method comprising: receiving a transaction;determining a type of said transaction; adding an amount of saidtransaction to an outstanding balance, when said type is a debit;offsetting an account balance starting with a delinquency with saidamount of said transaction, when said type is a credit; and, offsettingan account balance starting with a delinquency with said amount of saidtransaction, when said type is a payment.
 18. The method of claim 17,wherein said adding step further comprises adding an amount to acycle-to-date balance, and a current balance.
 19. A method for electinga payment term related to a transaction card billing statement, saidmethod comprising: providing a transaction account to a consumer;enabling a consumer to purchase items using said transaction account;acquiring transaction information; creating a billing statementcomprising said transaction information; providing said consumer withpayment terms comprising an early payment term, a deferred payment termand a standard payment term; and, receiving a payment from said consumeraccording to one of said payment terms.
 20. The method of claim 19,further comprising analyzing said consumer to determine when saidconsumer qualifies for at least one of: said early payment term, saiddeferred payment term and said standard payment term.
 21. The method ofclaim 19, further comprising receiving a selection of one of saidpayment terms from said consumer.
 22. The method of claim 19, furthercomprising receiving a selection of one of said payment terms from saidconsumer, wherein said consumer provides said selection via billingstatement stub, internet website, interactive voice response system andconsumer service representative.
 23. The method of claim 19, furthercomprising the following steps when receiving said payment according tosaid early payment term: receiving a payment from said consumer inresponse to a billing statement; determining when said payment is anearly payment based on an early payment date; retrieving a discountrate, wherein said discount rate is determined by comparing an amount ofearly pay eligible spend to an early payment tier; calculating an earlypayment credit based on said early payment and said discount rate; and,posting said early payment credit to an account of said consumer. 24.The method of claim 19, further comprising the following steps whenreceiving said payment according to said deferred payment term:receiving an election for said deferred payment term from said consumerin response to a billing statement; determining when said election doesnot exceed a predetermined number of available deferred payments todetermine when said consumer is eligible for said deferred payment;reducing a balance of said transaction account in an amount of saidpayment; moving a non-deferred balance to a deferred balance when saidnon-deferred balance is greater than zero and an account of saidconsumer is current; calculating a new current minimum due based on saiddeferred balance; and, incrementing a deferred payment counter.
 25. Themethod of claim 19, further comprising the following steps when postingsaid payment according to said deferred payment term: receiving atransaction; determining a type of said transaction; adding an amount ofsaid transaction to an outstanding balance, when said type is a debit;offsetting an account balance starting with a delinquency with saidamount of said transaction, when said type is a credit; and, offsettingan account balance starting with a delinquency with said amount of saidtransaction, when said type is a payment.